Problem:
We are thinking of buying a truck. It will cost $25,000 to purchase and $5000 to install. it will be depreciated SACRS (30%, 30%, 20%, 10%, 10%) and will last four years before being sold as scrap for $3000. Our tax rate is 20%. It is subject to and investment tax credit of 10%.
Requirement:
Question 1: Write the depreciation table and calculate the cash flow from the sale at time 4.
Question 2: The forger will enable us to sell more widgets for an higher price and so raise revenues by $12000 per year, while raising expenses by 3000 per year. Calculate all the cash flow for the progeed from purchase to sale
Note: Provide support for rationale.